Are you planting seeds or weeds?

As the weather turns warmer you can’t help but think about getting outside and enjoying the sunshine. So far 2010 has been a difficult year and the skies have seemed awful cloudy for most nonprofits.

No matter how the pundits might try to spin it people are more than just a little concerned about their job and the economy. Hearing about unemployment figures on a weekly basis as well as hearing that one out of four people are behind on their mortgage does not make anyone feel warm and fuzzy. Regardless, you have to be rooted in reality and not stick your head in the sand. On the contrary you have to have a plan!

Nonprofits for whatever reason seem to be more confused than ever, which is not good.

In order to survive you have to keep moving forward and remain focused on your mission. It is true you might have to scale back the services you offer or even layoff staff but you must maintain your forward momentum at all costs.

Now would be a good time to do a full review of what I call your “funding pie” to look at the percentages you are getting from each of your funding sources.

Take a moment and record your actual numbers looking in each category:

Program Fees

Board Member Donations

Staff Member Donations

Volunteer Donations

Individual Donations

Local Corporate Donations

Corporate Foundations

Local Family Foundations

Community Foundations i.e. Donor Advised Funds

Local Government Funding

State Funding

Federal Funding

**Nonprofit Endowment Account

**I would also be remiss if I did not mention that all nonprofits should strive to set up their own endowment fund. In my opinion the easiest way to accomplish this is by setting up a fund with your local community foundation. Also I realize that on every board there will be naysayers who will want to argue that you need every penny you have now and you can’t afford to put money aside to start an endowment. My response to that is the organization’s life depends on a long term vision not short term goals.

The following is a true story that might give you a moment to pause and motivate you and your board to set up that endowment account now.

I was on the board of a local nonprofit organization that received a call from a CPA in late December of one year. The CPA had a client that wanted to donate one million dollars to a nonprofit for tax reasons but it had to be done within a few days. There was also a stipulation that the nonprofit had to already have in place an endowment to receive the donation and that the endowment’s guiding document had to state that the principal monies were invested and only a percentage of the money earned were spent.

Unfortunately the nonprofit did not have an endowment in place at that time and lost out on what would have been a huge transformative gift for the organization!

If after you filled out the list you found that you are not receiving monies from one or more categories and need help in figuring out how you can accomplish this, feel free to send us
an email and I’ll be glad to help answer any questions you might have.

DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.

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